Our extensive work on retirement policy covers the many ways the aging of America will trigger changes in how we work, retire, and spend federal resources.
The number of Americans age 65 and over will rise from about 13 percent in 2008 to 20 percent by 2040. The recession dealt a heavy blow to retirement accounts, leaving many older adults worried about their retirement security.
Younger workers may have to shoulder higher tax burdens in the future if entitlement programs are expanded to meet need. Older adults can stabilize their finances by working past the normal retirement age. On average, working an extra year can boost annual retirement incomes by about 9 percent.
Without reform, Social Security, Medicare, and Medicaid outlays, inflated by soaring health care costs and growing numbers of retirees, will squeeze out funding for other government services. Entitlement programs are on track to eat up an estimated 80 percent of all federal tax dollars by 2040.
Policymakers can help protect Americans' retirement incomes by promoting savings and by revising policies that encourage early retirement, such as Medicare’s secondary payer rules, payroll taxes for older workers, and the Social Security retirement earnings test.
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